Regulatory Updates

04/05/2020 - COVID-19-related Money Laundering and Terrorist Financing Risks and Policy Responses
The FATF has issued a paper identifying challenges, good practices, and policy responses to new money laundering threats and vulnerabilities arising from the COVID-19 crisis. The Task Force indicates that the increase in COVID-19 related crimes, such as fraud and cybercrime are creating new sources of proceeds for illicit actors. AML/CFT policy responses can help support the swift and effective implementation of measures to respond to COVID-19, while managing new risks and vulnerabilities. In brief, a few examples of such policy responses include domestic coordination to assess the impact of COVID-19 on AML/CFT risks and systems, strengthened communication with the private sector, encouraging the full use of a risk-based approach to customer due diligence and supporting electronic and digital payment options.

Link to FATF publication can be found here.

07/05/2020 - COVID-19: Remaining Vigilant Against a Changing Criminal Landscape
The FIAU issued a Guidance Note informing subject persons of  an increase in specific types of illicit behaviour and an emergence of new activities related to the pandemic across Europe, including the fraudulent sale of medical products, benefit and compensation scheme fraud, cyber attacks, payment fraud, exploitation material, and increase in trade in illegal goods. The FIAU highlights the measures that should be adopted by subject persons to mitigate money laundering, including by revising the Business Risk, onboard customers in full compliance with AML/CFT regulations and procedures at all times, carrying out appropriate ongoing monitoring, providing employees with all necessary resources and training and assessing transactions and activities for red flags and immediately report suspicious transactions.

Link to FIAU guidance notice can be found here.

04/05/2020 - Updated Investment Services Rules applicable to Fund Managers and Collective Investment Schemes licensed as Money Market Funds in view of Regulation (EU) 2017/1131 of the European Parliament and of the Council (“the MMF Regulation”)
Pursuant to the circular issued by the MFSA, relating to the ESMA’s guidelines on stress-testing of money market funds and reporting by Investment Managers on money market funds (“MMFs”) to national competent authorities - MFSA has updated the Rulebooks applicable to Fund Managers managing MMFs and collective investment schemes licensed as MMFs to include the above-mentioned ESMA guidelines.

Circular can be found here.

08/05/2020 - COVID-19: Firms’ MiFID II Conduct of Business (Circular addressed to Investment Services Licence Holders (MiFID Investment firms)
Amid the COVID-19 pandemic, ESMA issued a public statement to address the risks that retail clients may face, when trading under these highly volatile and uncertain market circumstances and to remind investment firms of their conduct of business obligations under MiFID II and to also remind reminds investment firms of their conduct of business obligations under MiFID II, including to act fairly, honestly and professional in the best interests of clients, and to obtain the necessary client information when providing investment advice and portfolio management.

Circular can be found here.
Link to the release can be found here.

28/05/2020 - ESMA updates its questions and answers on the Securitisation Regulation
ESMA has updated its Q&As on the Securitisation Regulation (Regulation 2017/2402) to clarify the manner in which specific fields in the templates should be completed, including questions which are specific to fields in the ABCP template. The document also contains clarifications addressed to securitisation repositories.

Link to the release can be found here.

28/05/2020 - ESMA updates Q&As on MiFID II investor protection
ESMA updated the Q&As on MiFID II and MiFIR investor protection and intermediaries’ topics to include a new question and answer on ‘MiFID inducements, particularly to provide clarification on the application of the MiFID definition of “acceptable minor non-monetary benefits”.

Link to the release can be found here.

28/05/2020 - ESMA publishes updates to EMIR Q&As
ESMA has updated its Q&As on practical questions regarding EMIR data reporting issues, to provide clarifications on reporting of OTC derivative contracts by a financial counterparty (FC) on behalf of a non-financial counterparty below clearing threshold (NFC-) under Article 9(1a) of EMIR Refit.

Link to the release can be found here.

29/05/2020 - ESMA updates its Q&As on MiFID II and MIFIR transparency and market structures topics
ESMA has updated its Q&As regarding market structures and transparency issues under the Market in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). The Q&As provide clarification on the default liquidity status, SSTI and LIS thresholds of non-equity instruments, the publication of transactions in an aggregated form, the conversion of LIS/SSTI thresholds in lots and the multilateral systems facilitating the execution of repurchase agreement (repo) transactions.

Link to the release can be found here.

25/05/2020 - COVID-19 is placing unprecedented challenges on EU Banks
The EBA published a preliminary assessment of the impact of COVID-19 on the EU banking sector. With the global economy facing unprecedented challenges, banks entered the health crisis with strong capital and liquidity buffers - however, vulnerabilities persist in several areas and the COVID-19 crisis is expected to affect asset quality and, thus, profitability of banks going forward. The EBA Preliminary assessment delves into, inter alia, the following salient points, including the effects of the COVID-19 crisis with respect to operational resilience and contingency measures, the impact of COVID-19 on funding and liquidity, and the impact of COVID-19 on profitability of banks.

Link to the release can be found here.

03/05/2020 - Notice on lifting of some restrictive measures related to COVID-19
On the 1 of May 2020, Health Authorities announced the lifting of some of the restrictive measures put in place to combat the spread of COVID-19. As a result of this announcement, Lotto booths which have been closed in terms of Legal Notice 76 of 2020, entitled ‘Closure of Places Open to the Public Order, 2020’, will re-open as from Monday 4 of May 2020, with a number of safety measures still in place.

Link to the release can be found here.

22/05/2020 - Notice on further lifting of restrictive measures related to COVID-19 
On the 18 of May 2020, Health Authorities announced the lifting of more restrictions which were put in place to combat the spread of COVID-19. As a result of this announcement, Gaming Parlours which have been closed in terms of Legal Notice 76 of 2020, entitled ‘Closure of Places Open to the Public Order, 2020’, will re-open as from Friday 22 of May 2020. Gaming Parlours shall open solely and exclusively to provide sports betting through the till and for no other service, and clients are not to remain inside the gaming parlours after availing themselves of such sports betting service.

Link to the release can be found here.

05/05/2020 - Circular for Authorised Insurance and Reinsurance Undertakings on Regulatory Submissions
A new feature was introduced on the MFSA Web portal, in order to allow undertakings to receive immediate feedback in case of any validation errors and whether the QRT file was successfully submitted to EIOPA. This means that undertakings will no longer receive an email notification from MFSA officials in case of validation errors, instead the undertakings will be automatically notified by the system to make the necessary amendments and resubmit the file accordingly.

Circular can be found here.

07/05/2020 - Circular on the Amendments on Application Forms in terms of the Insurance Distribution Act
Pursuant to the Note of information informing the insurance market that applicants desirous to apply for registration in the “Agents Register”, “Brokers Register” or “Managers Register”, or enrolment in the “Agents List”, “Brokers List”, “Managers List”, “Tied Insurance Intermediaries List” or “Ancillary Insurance Intermediaries List”, should do so on the MFSA LH Portal. In this respect, Chapter 1 and Chapter 2 of the Insurance Distribution Act are being amended accordingly.

Circular can be found here.

13/05/2020 - Note for Information on the Amendment to the Insurance Distribution Rules in relation to Professional Indemnity Limits
Pursuant to a review undertaken by EIOPA, the MFSA has amended paragraph 1.9.6 of Chapter 1 of the Insurance Distribution Rules to increase the indemnity limited to at least €1,300,000 applying to each claim and in the aggregate of €2,000,000 per year for all claims. The MFSA expects insurance intermediaries to take into account the size and nature of the insurance distribution activities and reinsurance distribution activities carried out in Malta, when deciding the amount of indemnity their policy of professional indemnity insurance will be covering. Insurance intermediaries are required to revise the limits of their policy, as at renewal of their current professional indemnity insurance policies.

Circular can be found here.

18/05/2020 - European Insurers face increased risk exposures due to Covid-19, but market perceptions and imbalances remained at medium level
EIOPA published its updated Risk Dashboard based on the fourth quarter 2019 Solvency II data which summarises the main risks and vulnerabilities in the European Union insurance sector through a set of risk indicators. The results show that the risk exposures of the European Union insurance sector increased as the outbreak of Covid-19 strongly affected the lives of all European citizens with disruptions in all financial sectors and economic activities.

Circular can be found here.

26/05/2020 - Submissions of the Conduct-Related Data Return for Insurance Undertakings
Following the circular issued by the MFSA regarding the “Submission of the Complaints related data by Insurance Undertakings” and the “Consultation Document regarding Conduct-Related Data Return for Insurance Undertakings” , the MFSA published the final version of the Conduct-Related Data Return to be submitted by Insurance Undertakings. On this basis, insurance undertakings are required to submit two returns, including (i) a return focusing specifically on the complaints received during 2019 (full year); and (ii) a Return covering the first 6 months of 2020, i.e. 1 January - 30 June 2020.

Circular can be found here.

11/05/2020 - Circular on the Implementation of the IORP II Directive
The IORP II Directive introduces a new regulatory framework for an occupational retirement scheme, in order to provide adequate protection of members and beneficiaries of the said scheme. The said directive introduced new requirements on the written policies and procedures which Retirement Scheme Administrators are required to maintain, including written policies in relation to, inter alia, risk management, internal audit, underwriting, remuneration, conflicts of interest and where relevant outsourced activities and the actuarial function.

Circular can be found here.